Did UBS Have a `Serious' Hiring Problem? Judge Asks at Tax Trial
(Bloomberg) -- A French judge grew weary on the fourth week of a high-profile trial of UBS Group AG’s repeated attacks on the credibility of witnesses and the bank’s insistence that it had no knowledge about clients evading taxes.
Top UBS France executives last week took aim at two whistle-blowers who helped trigger probes, saying one had “lied” and accused the other of “blackmail.” A lawyer for UBS had also sought to discredit a former employee who told investigators that as much as 99 percent of the money French clients deposited in Switzerland was undeclared, pointing out that he’s been convicted of embezzlement.
“There was maybe a quite serious hiring problem at UBS around that time,” Judge Christine Mee said Monday afternoon, taking a more fiery stance than in the previous three weeks of the trial. The remark came after Alain Robert, UBS’s vice chairman of wealth management, tried to further question the credibility of the whistle-blowers while representing the Swiss bank on the stand.
The UBS case is part of a French crackdown on tax fraud conducted via Switzerland that’s seen the conviction of a former minister and a 300 million-euro ($341 million) settlement with HSBC Holdings Plc. France is seeking 1.6 billion euros in compensation from Zurich-based UBS in the case and the bank could face billions of euros more in fines.
The trial is focusing on allegations UBS provided numbered accounts and set up trusts to launder money French customers hadn’t told tax authorities about. UBS denies any wrongdoing.
Robert said there were legitimate reasons for providing such services. He also explained the use of the bank’s retained mail service whereby correspondence was held by the lender rather than sent to customers’ home addresses. “I know a lot of people who don’t want to inform their family about their wealth,” he told the court.
Robert further refuted claims made by the witnesses that it was well-known inside the bank that the vast majority of French clients didn’t declare money they had in Switzerland. The UBS executive told the court that he has “no information” about French residents who cheated on their taxes.
“It’s not the bank’s problem” to verify whether clients have paid their taxes, Robert said. “It’s up to the client, not the bank, to take responsibility vis-a-vis tax authorities.”
Taking over from the judge, an official working for France’s financial prosecutor went on to drill Robert, asking him to comment on several pieces of evidence contained in the case file.
In particular, the Parquet National Financier’s Eric Russo brought up a document stemming from a UBS employee who had worked in Switzerland that mentioned requests from clients to separate declared and undeclared money.
Robert said the document is “partial” and shouldn’t be used to draw any general conclusions. He added that he considers that the bankers referred to in the document don’t provide a reliable assessment and suggested the document was quoted out of context.
UBS lawyer Denis Chemla then sought to ridicule the theory that there was a generalized system to enable French residents to dodge taxes by pointing out the lack of suspect transfers presented as proof in the case.
“It it so that when one decides to send money to Switzerland that can be done in a briefcase?” Chemla asked.
“No,” replied Robert. “It’s done via a traceable bank transfer.”
The UBS trial is set to last until Nov. 15, with several executives set to take the stand in the coming days.
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